"A child's learning is the funtion more of the characteristics of his classmates than those of the teacher." James Coleman, 1972

Thursday, January 05, 2006

Privatize Higher Ed for the Good of the Poor?

By soon-to-be former President of Miami University, James Garland's stalking horse op-ed on January 3 makes one wonder what job he is looking for next. Will it be to oversee plans for the dismantling of the American public university system? His rhetoric is certainly perfect for the job of Chief Bamboozler for Higher Ed--just promise that all the tax money saved from the destruction of the public university will go to help the poor and the working class get a college education, while the wealthy are asked to pay more in tuition. Let market forces take care of the rest. Sounds perfect, right? No Coed Left Behind?

Here's Garland's lead:
AS Education Secretary Margaret Spellings' new Commission on the Future of Higher Education gets to work, it might do well to begin by acknowledging this fact: The historical business model for public higher education is broken and cannot be fixed.

1 comment:

  1. Why is the State in the education industry at all? This "why?" question has three interpretations: I) the historical "why?", II) the welfare-economic "why?", and III) the political science "why?".

    I. The Historical "Why?"

    State (government, generally) intrusion into the education originated in the imperative for
    religious indoctrination. The earliest compulsory attendance statute on record appeared in Germany after the Protestant Reformation when the Lutheran clergy, fearing that the population, if left to themselves, would relapse into Catholicism, prevailed on State authorities to mandate indoctrination into the new religion. In the British colonies of North America the earliest compulsory attendance statute, Massachusetts' "That Old Deceiver Satan" act, had religious indoctrination as its explicit rationale. The problem was not that children were not learning to read (they were) and not that they were not learning a trade (they were), but that parents were not properly indoctrinating their children into the State religion. Elsewhere in colonial America and the early post-revolutionary US, public support of school often took the form of per-pupil contributions to Church-operated schools (vouchers, essentially). The switch from a voucher-subsidized market to a State-monopoly system coincided with a wave of Catholic immigration. When this wave reached US shores, the resident, wealthier, Protestant majority faced a dilemma: (i) raise taxes on themselves to keep per-pupil expenditures constant or (ii) hold taxes constant and see the per-pupil budget spent on their own children fall. They chose neither, and "discovered" that the Constitution's "establishment" clause prohibited State support of religious schools. Horace Mann rode a wave of ant-Catholic bigotry to a position of authority over his own pet bureaucracy. In Hawaii, Boston-based Protestant missionaries arrived earlier than French Catholic missionaries. In1837, when a mainland recession reduced support of overseas missions, the Protestant missionaries prevailed upon the ali'i (hereditary rulers) to support mission schools and to restrict State support to schools operated by Protestants. An echo of the bigotry of the time appears in the will of Princess Bernice Pauahi Bishop, which requires teachers at Kamehameha Schools to be members of a Protestant denomination.

    II. The Welfare-economic "Why?"

    The education industry is not a natural monopoly, and beyond a rather low level there are no economies of scale at the delivery end of the education business as it currently operates. Education only marginally qualifies as a "public good" as economists use the term, and the "public goods" argument (in this case, school, that society as a whole gains when children receive an education), implies subsidy and regulation, at most, not State (government, generally) operation of an industry.

    Natural monopoly and economies of scale are the usual welfare-economic arguments for State (government, generally) operation of an industry. These arguments are a consideration but are not decisive: consider auto manufacture, where most countries have no State-operated or independent auto industry, aircraft manufacture, where, of the world's two viable commercial manufacturers (Boeing and Airbus), one is "public" (i.e., private) and the other is a money-losing State enterprise. Again, most countries import, rather than manufacture, aircraft. Home Depot and Borders Books demonstrated significant economies of scale in retailing, but this did not prompt Congress to nationalize the retail hardware or book business.

    Whatever the merits of State operation --given-- significant economies of scale or natural monopoly, these considerations do not apply to the argument for State operation of school. Pre-college, the education industry exhibits significant dis-economies of scale. Per-pupil costs rise as districts increase in size. The argument regarding post-secondary education is more complicated, as the argument for State support offers three separate "public goods" university faculty provide:(1) instruction, (2) consulting services, and (3) research. (1) The GI Bill and Pell Grants demonstrate that State operation is not necessary for instruction. (2) Independent firms demonstrate that an unsubsidized market will provide consulting services. (3) Interested firms support research, so again, no subsidy is required. Since faculty and universities claim patent rights, taxpayers gain nothing from subsidizing faculty labs.

    Taxpayers gain nothing from State (government, generally) operation of school, relative to what a voucher-subsidized market would deliver, and little from taxpayer subsidy of school, relative to what an unsubsidized market would deliver.

    III. The Political Science "Why?"

    Why do today's politicians maintain the current policy? There is no mystery here. US taxpayers spend over $400 billion in support of K-12 school and (ballpark estimate) another $200 billion on post-secondary school. System insiders (employees, suppliers, construction contractors) use some of their monopoly rents to support for re-election politicians who keep the revenue stream flowing. University faculty are articulate and have a lot of free time. They stridently defend their financial interests.

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